Supply Chain Management Competitive Advantage

© 2007 by Prentice Hall Management Information Systems, 10/e Raymond McLeod and George Schell 2 The Firm in Its Environment Environmental elements are organizations and individuals that exist outside the firm and have a direct or indirect influence on it. Such as suppliers, customers, labor unions, financial community, stockholders and owners, competitors, and governments. Global community is the geographic area where the firm performs its operations.

© 2007 by Prentice Hall Management Information Systems, 10/e Raymond McLeod and George Schell 3 Figure 2.2 Eight Environmental Elements

© 2007 by Prentice Hall Management Information Systems, 10/e Raymond McLeod and George Schell 4 Environmental Resource Flows Information flows from customers. Often. Material flow to customers. Often. Money flow to stockholders. Often. Raw materials flow from suppliers. Often. Money flow from government. Less often. Material flow to suppliers. Less often. Personnel flow to competitors. Less often.

© 2007 by Prentice Hall Management Information Systems, 10/e Raymond McLeod and George Schell 5 Managing the Physical Resource Flows– Supply Chain Management Supply chain is the pathway that facilitates the flow of physical resources from suppliers to the firm and then to customers. Supply chain management manages the resources through the supply chain to ensure timely and efficient flow.

© 2007 by Prentice Hall Management Information Systems, 10/e Raymond McLeod and George Schell 6 Supply Chain Management Activities Forecasting customer demand Scheduling production Establishing transportation networks Ordering stock Refill from the suppliers Receiving stock from suppliers

© 2007 by Prentice Hall Management Information Systems, 10/e Raymond McLeod and George Schell 7 Supply Chain Management Activities (Cont’d) Managing inventory–raw materials, work-in-process, and finished goods Executing production Transporting resources to customers Tracking the flow of resources from suppliers, through the firm, and to customers

© 2007 by Prentice Hall Management Information Systems, 10/e Raymond McLeod and George Schell 8 Supply Chain Management Firm’s information systems can be used to perform the supply chain activities. Electronic systems provide the ability to track the flow of the resources as it occurs. Is a crucial aspect of a firm’s ERP system.

Enterprise Resource Planning Systems Enterprise Resource Planning System (ERP) is a computer-based system that enables the management of all of the firm’s resources on an organization-wide basis. Y2K complaint SAP–ERP Provider

© 2007 by Prentice Hall Management Information Systems, 10/e Raymond McLeod and George Schell 10 Competitive Advantage Competitive advantage refers to the use of information to gain leverage in the marketplace. Uses virtual as well as physical resources. Is used to meet the strategic objectives of the firm.

© 2007 by Prentice Hall Management Information Systems, 10/e Raymond McLeod and George Schell 11 Porter’s Value Chains Value chain is created to achieve competitive advantage. Consists of the primary and support activities that contribute to margin. Margin is the value of the firm’s products and services minus their costs, as perceived by the firm’s customers. Increased margin is the objective of the value chain.

© 2007 by Prentice Hall Management Information Systems, 10/e Raymond McLeod and George Schell 12 Porter’s Value Activities Primary value activities manage the flow of physical resources through the firm. Support value activities include the firm’s infrastructure. Each value activity includes purchased inputs, human resources, and technology.

© 2007 by Prentice Hall Management Information Systems, 10/e Raymond McLeod and George Schell 13 Challenges from Global Competitors Multinational corporation (MNC) is a firm that operates across products, markets, nations, and cultures. It consists of a parent company and its subsidiaries. Information processing is crucial to minimize uncertainty.

© 2007 by Prentice Hall Management Information Systems, 10/e Raymond McLeod and George Schell 14 Challenges in Developing Global Information Systems Global information system (GIS) describes an information system that consists of networks that cross national boundaries. Challenges Politically imposed constraints. Cultural and communications barriers.

© 2007 by Prentice Hall Management Information Systems, 10/e Raymond McLeod and George Schell 15 GIS Challenges Restrictions on hardware purchases and imports Data processing Data communications Transborder data flow (TDF) is the movement of machine-readable data across national boundaries.

© 2007 by Prentice Hall Management Information Systems, 10/e Raymond McLeod and George Schell 16 GIS Subsidiary Challenges Technological problems due to level of technology in subsidiary countries Telecommunications speed and quality Software copyrights and licenses Lack of support from subsidiary managers

© 2007 by Prentice Hall Management Information Systems, 10/e Raymond McLeod and George Schell 17 Knowledge Management Information resources consist of hardware, software, information specialists, users, facilities, databases, and information. Knowledge management (KM) is acquiring data, processing data into information, using and communicating information in the most effective way, and discarding information at the proper time.